But is the money you’re squirreling away every month enough? Are you going to find out when it’s too late that you haven’t saved enough?

You need to make sure you’re on track. So how can you work out how much you need? Read on to find out…

Annuities give you peace of mind

Once you reach retirement, you need to decide how you’re going to generate an income from your retirement savings or pension pot.

One of the options open to you is to buy an annuity, Phil Oakley in Money Morning UK explains. The advantage of buying an annuity is you know you’ll always receive an income until the day you die.

But how much is enough to buy an annuity that will produce enough in income?

One of the issues you’re faced with now is you don’t know what annuity rate you’ll get once you retire. It depends on a whole host of factors, including the interest rates on government bonds and how long the insurance company expects you to live for.

Let’s say the rate is 5.8%. You can change this figure to give you an idea of what you need to save in best and worst case scenarios.

How much money do you need to save for retirement?

From your calculations, you’ve worked out that you need R300,000 (in today’s money) a year to live on. To achieve this, you need retirement savings of R5.2 million!

How can you work out this figure?

Well you need to divide the income you want per year by the rate of return from the annuity. So in this case, you divide R300,000 by 5.8%.

*********** Best seller *************

WARREN, IT’S YOUR NECK ON THE LINE!

by Warren Jeffery, Head of Trading and Research, FSP Invest

That’s what my publisher said to me when she called me into her office.

You see, I’d told her I wanted to make YOU an extraordinary offer:

I promise to make you AT LEAST three gains of 30% or more in the next three months.

In fact in the last month alone I’ve notched up a total accumulated gain of 268.14% for my investors.